THE Australian Competition and Consumer Commission has advised that it will not oppose JBS’s proposed acquisition of Primo, finding no grounds for concern over market consolidation.
Beef Central wrote about JBS’s intention to acquire Australian Consolidated Food Holdings, the parent company of Primo, one of Australia’s largest value-adding and smallgoods companies, which also operates a substantial export abattoir near Scone in NSW, in this earlier article. It was in the beef cattle processing segment, rather than smallgoods or value adding, where ACCC’s main scrutiny was focused.
In a statement issued this morning, the ACCC said it received submissions from a range of interested parties, including beef producers, competing abattoirs, and meat and smallgoods suppliers and customers.
Many industry participants expressed concern that the proposed acquisition would result in less competition in the market for the acquisition of slaughter cattle in northern NSW and Queensland.
“The ACCC undertook a detailed assessment and determined that Primo is currently not a strong competitive constraint on JBS. JBS’s abattoirs in Queensland and Primo’s abattoir at Scone are more than 500km apart,” ACCC chairman Rod Sims said.
“Furthermore, the increase in market share as a result of the proposed acquisition would be relatively small and JBS would continue to be constrained in the market for the acquisition of prime cattle by a number of alternative abattoirs and supermarket chains, in the northern NSW and southern Queensland region,” he said.
While the ACCC determined that, in this instance, the proposed acquisition would be unlikely to raise significant competition concerns, it said it was “wary of the potential impact of further consolidation of abattoirs.”
“The ACCC will continue to monitor this industry and any future acquisitions will face additional scrutiny,” Mr Sims said.
The ACCC also considered whether the proposed acquisition would have any competitive impact on meat customers, smallgoods customers or the provision of prime cattle service kills, but did not consider that any significant competition concerns arose.
The transaction still requires Foreign Investment Review Board approval.